The completion of the most recent brief relief rally means traders need to be extra alert as several altcoins are now facing selling pressure.
As 2019 comes to an end, traders will closely analyze the events scheduled for 2020 that might boost cryptocurrency prices. One of the most talked-about and watched events would be the halving of Bitcoin miner rewards in May 2020.
While Bitcoin’s price had surged following the previous two halving events in 2012 and 2016, it is difficult to say with certainty how the crypto markets will react this time. Many analysts are also divided on their expectations about the event. However, as halving nears, we anticipate the chart patterns will provide an insight into the likely reaction to the event.
Daily cryptocurrency market performance. Source: Coin360
Central banks have been buying gold at a record pace for the past two years. This shows that the central banks are themselves moving away from the reserve currencies and are attempting to hedge the trade war and geopolitical risks with gold.
As risks increase, the institutional investors will also look at other asset classes to hedge their portfolio. As cryptocurrencies do not correlate with any asset class, we anticipate investment in cryptocurrencies to pick up next year. Even a small portion of institutional money can start a new bull run in crypto.
While a few altcoins are looking strong, can they continue their relief rally without support from Bitcoin? Let’s analyze the charts to find out.
The bears foiled the attempts by the bulls to scale the 50-day SMA on Dec. 23 and again on Dec. 29. This shows selling at higher levels. With 20-day EMA flattening out and RSI close to the midpoint, a few days of range-bound action is likely.
Bitcoin (BTC) will signal a trend reversal if the bulls can scale above the overhead resistance at $7,856.76. The downtrend line is also placed just above this level, hence, we expect a breakout of $7,856.76 to start a new uptrend. Therefore, we have retained the buy recommended in an earlier analysis.
BTC USD daily chart. Source: Tradingview
Conversely, if the bulls fail to scale above $7,856.76, a few more days of range-bound action is likely. If the BTC/USD pair consolidates between $7,000 and $7,856.76, it will signal strength.
However, a break below the immediate support at $7,000 will be a bearish sign. The next support on the downside is $6,435. Repeated retests of a support level weakens it. If the bears can sink the price below $6,435, it will be a huge negative and can result in panic selling.
The bulls pushed Ether (ETH) back above the overhead resistance at $131.84 and the 20-day EMA at $133 on Dec. 29. This was the first occasion that price had closed (UTC time) above the 20-day EMA since Nov. 15.
ETH USD daily chart. Source: Tradingview
However, the bulls could not build up momentum and are facing stiff resistance at the downtrend line. The bears are currently attempting to sink the price back below $131.484. If successful, a decline to $122.496 is possible.
If the bulls defend the support at $122.496, a few days of range-bound action is likely. The ETH/USD pair will pick up momentum on a break above the downtrend line. Above this level, a rally to $157.50 is possible. The 50-day SMA at $149 might offer minor resistance but we expect it to be crossed.
XRP continues to trade inside the $0.18339 and $0.20041 range. The 20-day EMA is located close to the resistance of the range, hence, we anticipate the bears to defend this level aggressively.
XRP USD daily chart. Source: Tradingview
If the price turns down from the current levels, it is likely to extend its stay inside the range for a few more days. A break below the range will be a negative sign as it will resume the downtrend.
However, if the bulls manage to push the price above $0.20041 and sustain it, a rally to $0.2326 is possible. Therefore, aggressive traders can buy on a close (UTC time) above $0.20041 and keep a stop loss of $0.183.
Bitcoin Cash (BCH) broke out of the 20-day EMA on Dec. 27 and closed (UTC time) above $203.36 on Dec. 28. This triggered the buy recommendation given in our previous analysis. The 20-day EMA is turning up and the RSI has climbed above 50, which suggests that the bulls are making a comeback.
BCH USD daily chart. Source: Tradingview
Currently, the bears are attempting to defend the 50-day SMA, which is sloping down. If the price turns down from the current levels and breaks below $203.36, it will signal a lack of buyers at higher levels. Therefore, traders can keep the stop loss on the long position at $181.
Conversely, if the BCH/USD pair scales above the 50-day SMA, it can move up to $227.01, which might again act as a resistance. Aggressive traders can book partial profits at this level if the bulls struggle to break above it. However, if the buyers can carry the price above $227.01, the traders can trail the stops closely.
Litecoin (LTC) closed (UTC time) above $43 on Dec. 29, which triggered the buy proposed in our previous analysis. Though the price has risen above the 20-day EMA, it lacks momentum. This shows that the bulls are in no urgency to buy at higher levels.
LTC USD daily chart. Source: Tradingview
If the bulls fail to defend the support at $42.0599, the bears might again sink the price to $39.252. If this support breaks, a retest of the recent low at $35.8582 is possible.
However, if the bulls defend the support at $42.0599, we anticipate the LTC/USD pair to move up to the 50-day SMA at $46.6 and above it to $50. The traders can keep an initial stop loss at $38, which can be trailed higher later.
The bulls pushed EOS above the resistance at $2.5804 on Dec. 27, which triggered our buy suggested in an earlier analysis. The altcoin has reached the 50-day SMA, which is acting as a stiff resistance. If the price turns down from the current level and slips below $2.5804, it will indicate a lack of buyers at higher levels. The traders can keep the stop loss at $2.40.
EOS USD daily chart. Source: Tradingview
However, if the bulls keep the price above $2.5804, it will indicate strength. The 20-day EMA is trying to turn up and the RSI has climbed into the positive zone, which suggests that bulls are attempting a comeback.
A break above the 50-day SMA can carry the EOS/USD pair to $2.8695, which is likely to act as a stiff resistance. The traders can watch the price action at this level closely and book partial profits if the bulls struggle to scale above it.
BNB USD daily chart. Source: Tradingview
A breakout of $14.5201 can push the price to $16.50. The 20-day EMA has flattened out and the RSI is just below the midpoint, which suggests that the selling pressure has reduced.
However, if the bulls fail to scale above $14.5201, the BNB/USD pair might continue to trade inside the range for a few more days. It will turn negative on a break below the recent low at $12.1111.
Bitcoin SV (BSV) scaled above the overhead resistance at $92.694 on Dec. 28, which triggered our buy recommended in an earlier analysis. Thereafter, momentum picked up and the altcoin broke above the downtrend line.
BSV USD daily chart. Source: Tradingview
However, the up move is facing stiff resistance at the 50-day SMA. If the bears sink the price back below $92.693, it will indicate weakness. For now, the traders can keep the stop loss at $83.
If the BSV/USD pair rebounds off $92.693 and breaks out of the 50-day SMA, a rally to $113.96 will be on the cards. The traders can book partial profits at this level and trail the stops on the rest.
Stellar Lumens (XLM) continues to trade inside the $0.042133 to $0.047799 range. The 20-day EMA is placed just above the resistance of the range. Hence, we expect the bears to defend it aggressively.
XLM USD daily chart. Source: Tradingview
If the price turns down from the current levels, it will extend its stay inside the range for a few more days. The XLM/USD pair will turn negative on a break below the range.
Conversely, if the bulls can push the price above $0.047799, it will indicate strength. However, we expect the pair to again hit a wall close to $0.051014. We will wait for the price to breakout and close (UTC time) above $0.051014 before proposing a trade in it.
Tezos (XTZ) has broken down of the 50-day SMA, which is a bearish sign. There is a minor support at $1.2 below which a drop to $1.1 is possible. The moving averages are on the verge of a bearish crossover, which indicates that sellers have the upper hand.
XTZ USD daily chart. Source: Tradingview
If the XTZ/USD pair finds support at $1.2, the bulls will make another attempt to resume the uptrend. A breakout of the moving averages will be the first sign that bulls are back in the game. We will wait for a new buy setup to form before turning positive. Until then, we suggest traders remain on the sidelines.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.